The critical issues
6.87Some statutes contain parallel criminal sanctions and civil pecuniary penalties, which are the same in all respects except for the requirement of mens rea for the criminal offence. For example under the Hazardous Substances and New Organisms Act 2001 (HSNO Act) a person could be convicted of knowingly importing a new organism into New Zealand under s 109; and be liable for a civil pecuniary penalty for importing a new organism into New Zealand (for which no mental element is required) under s 124G. It may also be possible under some statutes for a single course of conduct to contravene numerous civil pecuniary penalty provisions. Both of these scenarios raise the need to consider rules that protect defendants from double jeopardy.
6.88The term double jeopardy refers to the concept, expressed by Black J in Green v United States, that:
[T]he State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continual state of anxiety and insecurity, as well as enhancing the possibility that even though innocent he may be found guilty.
6.89The concept is more immediately associated with the criminal law, but it has arisen for consideration in respect of non-criminal remedies and proceedings. Given the punitive nature of civil pecuniary penalties, we suggest that the principles of double jeopardy require consideration in their design. Some existing civil pecuniary penalty statutes deal with such issues. However at present they take a variety of approaches. Some are fairly comprehensive but others are silent or ambiguous on various points. This can lead to conceptual confusion and a lack of certainty for both enforcement bodies and defendants.
6.90The Commission suggests that civil pecuniary penalty statutes should state clearly how the risk of double jeopardy is to be addressed. We consider the following considerations are relevant:
- the need to pay proper consideration to the underlying rationales for the rules against double jeopardy;
- the need to avoid punishing the same conduct twice;
- the need to allow regulators some flexibility as to the enforcement route they take.
The rule against double jeopardy
6.91The principle of double jeopardy is expressed in s 26(2) of NZBORA which provides:
No one who has been finally acquitted or convicted of, or pardoned for, an offence shall be tried or punished for it again.
6.92Section 26(2) makes it clear that the rule against double jeopardy prohibits not only double punishment, but also protects individuals from repeated attempts by the State to prosecute them for the same offence. Aspects of the rule are also expressed in s 10(4) of the Crimes Act 1961 which provides that “no one shall be liable … to be punished twice in respect of the same offence.” This includes two different offences that contain the same or substantially the same elements.
6.93Double punishment under the criminal law was discussed by the High Court of Australia in Pearce v R. In seeking to proscribe a range of acts, legislatures may (intentionally or otherwise) create offences with overlapping elements. There are instances where an offender’s conduct will fall into that area of overlap. But punishing them twice on that basis amounts to “punish[ing] offenders according to the accidents of legislative history, rather than according to their just deserts.” Accordingly:
To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common.
6.94There are a number of commonly advanced justifications for the rules against double jeopardy, which are encompassed by Black J’s statement above. First, double jeopardy rules protect the harassment of an accused by repeated prosecution for the same matter. Once a defendant has been acquitted, this can come as a great relief and brings an end to a difficult and trying process. Reopening that process is likely to be at great cost to the defendant and may also cause distress to third parties such as family, witnesses and the alleged victim.
6.95Secondly, the rule against double jeopardy can promote confidence in the administration of justice because it prevents harassment and brings finality. Thirdly, if we accept that in exceptional cases a defendant who is factually innocent is found guilty, then allowing repeated trials necessarily increases the likelihood of wrongful conviction. Finally, allowing repeated prosecutions might act as a disincentive to the Crown carrying out a thorough and efficient investigation the first time around.
Double jeopardy and civil pecuniary penalties
6.96Courts have found that s 26(2) of NZBORA applies only to criminal proceedings relating to an offence against the law. However it is also accepted that this fact does not preclude the underlying principles being invoked in respect of conventional civil proceedings. As Thomas J put it, double jeopardy and double punishment remain an affront to common notions of fairness. In Daniels v Thompson a majority of the Court of Appeal applied the rule against double jeopardy to bar an award of exemplary damages where punishment has already been exacted under the criminal law and to provide grounds for striking out a claim for exemplary damages as an abuse of process where a defendant has been acquitted of essentially the same facts. The nature of an award of exemplary damages, being to punish and deter, was central to the Court’s decision. The High Court has also considered the potential for double punishment when setting civil pecuniary penalties under the Commerce Act 1986.
6.97Given their punitive nature, the issue of double jeopardy is clearly relevant to civil pecuniary penalties. We would contend that the issue is of greater significance in this context than where exemplary damages are concerned because of the public – State-imposed – nature of civil pecuniary penalties. Breach of the principle can arise in a number of ways: a regulator may commence civil proceedings and then also commence criminal proceedings; criminal proceedings may be brought unsuccessfully and a regulator may then seek a civil pecuniary penalty in respect of the same conduct; or a regulator may bring successful proceedings in one jurisdiction and still seek a penalty in the other. There may also be scope for the imposition of more than one civil pecuniary penalty or of other forms of civil remedy such as management bans or compensation orders.
6.98Below, we consider how civil pecuniary penalty statutes do or should deal with these situations. Possible approaches include statutory bars on the taking of one set of proceeding after another has been commenced or completed; reliance on judicial discretion to stay proceedings for abuse of court process; protection against the use of evidence given in one proceeding being used in another; and/or greater guidance for courts when setting penalties.
(a) Commencing criminal proceedings while civil pecuniary penalty proceedings are ongoing
6.99This scenario could arise where an allegedly criminal element to the offending, or evidence establishing such an element, has come to the attention of the regulator after civil pecuniary penalty proceedings have been commenced. In those circumstances, there appears to be a strong argument for the regulator being able to commence criminal proceedings. Allowing this also gives regulators flexibility, so that once they have opted for the civil pecuniary penalty enforcement track, they are not prevented from taking later criminal proceedings. The question is what should happen to the existing civil proceedings.
6.100At present most Acts are silent on this question. However, the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) and HSNO Act both provide that criminal proceedings may be commenced provided that any existing civil pecuniary penalty proceedings are stayed. From a double jeopardy perspective there is a question as to whether a defendant should be required to defend contemporaneous efforts by the State to pursue a penalty against him or her. This seems objectionable. However, aspects of the design of a number of civil pecuniary penalty statutes (which we endorse in this paper) mean that the situation can be complex. Under some statutes, third parties can rely on a “declaration of contravention” – an order the Court must make if a pecuniary penalty has been applied for and a breach made out. Such a declaration can be relied upon in compensation proceedings. The staying of the pecuniary penalty proceedings may delay the Court making a declaration of contravention and so delay applications for compensation.
6.101Under its inherent jurisdiction, the High Court can already stay civil proceedings when there are pending criminal proceedings. In Daniel v Thompson the majority of the Court of Appeal found that where a criminal prosecution had been commenced or was likely, it would be appropriate to stay proceedings for exemplary damages to prevent an abuse of process. It may also be appropriate to grant a stay in circumstances where the defendant persuades the Court that his or her position in the criminal trial would be prejudiced. This could arise, for example, where the pretrial civil procedures would force them to reveal their line of defence, thereby depriving them of their right to silence. The criteria for granting such a stay were set out in Wells v Lewis, where the High Court noted that it was important to balance the proper concerns of both litigants.
6.102It may be that the question of staying civil pecuniary penalty proceedings where criminal proceedings are subsequently commenced should be left to the High Court on this basis. However, we question whether, in contrast to standard civil proceedings, the fact that civil pecuniary penalty proceedings and criminal proceedings under a particular regulatory regime are pursued and litigated by the same complainant – the State – warrants a statutory direction that the existing civil proceedings must be stayed, as provided for under the AML/CFT Act and HSNO Act. Our initial view is that it does. We return to the question of how statutes should deal with lifting a stay of proceedings at paragraph 6.113 below.
Q8 Should a regulator be able to commence criminal proceedings if civil pecuniary penalty proceedings concerning the same conduct have already been started?
Q9 Should civil pecuniary penalty statutes require that, if criminal proceedings are commenced, the civil pecuniary penalty proceedings must be stayed?
6.103In addition to providing for the stay of civil pecuniary penalty provisions, the AML/CFT Act provides:
75 Restriction on use of evidence given in civil penalty proceedings
(1) Evidence of information given, or evidence of production of documents, by a person is not admissible in criminal proceedings against the person for an offence under this Part or any other enactment if—
(a) the person previously gave the evidence or produced the documents in civil penalty proceedings under this Part against him or her, whether or not a civil penalty was imposed; and
(b) the proceedings for the civil penalty related to conduct that was the same or substantially the same as the conduct constituting the offence.
6.104Such a provision provides protection so that evidence adduced under civil procedural rules cannot be used in later criminal proceedings, which operate under more restricted rules of evidence. Should such a provision be included in all civil pecuniary penalty statutes?
6.105A similar provision is found in s 1317Q of the Corporations Act 2001 (Cth). The Australian Law Reform Commission (ALRC) noted opposition to that provision on the basis that once evidence has been given by a person in proceedings for a civil pecuniary penalty order against that person, the evidence is forever inadmissible in criminal proceedings against the same person. This requires regulators to be mindful when obtaining and using evidence in civil pecuniary penalty investigations and proceedings, so as not to preclude or undermine a later criminal proceeding. The ALRC has also observed that there is nothing preventing “derivative use” of that evidence, ie, allowing the regulator to adduce, in a criminal trial, evidence flowing from a chain of inquiry started by evidence given in civil pecuniary penalty proceedings.
Q10 Should there be a statutory restriction on the use in criminal proceedings of evidence adduced in civil pecuniary penalty proceedings?
(b) Commencing civil pecuniary penalty proceedings after criminal proceedings have failed or been withdrawn
6.106These scenarios are currently possible under a number of statutes but they are not explicitly addressed. Because of the lower standard of proof employed in civil pecuniary penalty proceedings, there may be an obvious attraction to pursuing a civil pecuniary penalty after the Crown has failed to establish the parallel criminal offence beyond reasonable doubt. On one hand this clearly can give rise to the impression that regulators are being given “a second bite at the cherry”. However, the ability to commence civil pecuniary penalty proceedings in these circumstances was supported by the ALRC, on the basis that the desirability of allowing regulators flexibility outweighs concerns about double jeopardy (subject to clear principles governing the exercise of regulator discretion). The ALRC does not draw any distinction between acquittal and withdrawal of prosecution.
6.107As noted above, in Daniels v Thompson a majority of the Court of Appeal found that the rule against double jeopardy was grounds for striking out a claim for exemplary damages as an abuse of process where a defendant has been acquitted of an offence on essentially the same facts. It may be that courts would take the same approach with civil pecuniary penalty proceedings in these circumstances. However, again there is a question whether civil pecuniary penalty statutes should include a statutory bar on such proceedings. Once a regulator has failed on the criminal enforcement and investigative path, should they be able to commence civil pecuniary penalty proceedings?
6.108It seems to us that the situation is clearer in the case of the withdrawal of criminal proceedings. Such proceedings may be withdrawn for any number of reasons. The need for flexibility noted by the ALRC, we suggest, supports regulators being able to commence civil pecuniary penalty proceedings in those circumstances.
Q11 Should a regulator be able to commence civil pecuniary penalty proceedings if criminal proceedings have failed or been withdrawn?
(c) Commencing criminal proceedings after a civil pecuniary penalty has been imposed
6.109Under some civil pecuniary penalty statutes it is possible to be subjected to a civil pecuniary penalty and a prison term for the same conduct. Some allow the imposition of both a civil pecuniary penalty and imprisonment and/or criminal fine for the same conduct. In contrast the AML/CFT Act contains a comprehensive “one penalty only” provision in s 74(1). Under that Act, after successful civil pecuniary penalty proceedings, criminal proceedings are barred where the proceedings would relate to “the same or substantially the same conduct”. Arguably this approach gives appropriate recognition to the punitive reality of civil pecuniary penalties.
6.110However, as for scenario (a) above, one argument in favour of allowing criminal proceedings after a civil pecuniary penalty has been imposed is where, initially, there is evidence that would only meet the civil standard, but the regulator subsequently obtains clear evidence of criminality, sufficient to bring a prosecution. The prosecuting authority may consider that the level of criminality involved warrants a term of imprisonment and/or criminal conviction in addition to a pecuniary penalty. It is relevant that a term of imprisonment may be sought not only for its punitive but also its protective function – in this way it serves a purpose that cannot be supplied by a civil pecuniary penalty.
6.111A number of Australian Acts allow the commencement of criminal proceedings after successful civil pecuniary penalty proceedings. Australian Guidelines supported this approach, as did the ALRC on the basis that it gives greater flexibility to regulators; retains the ability for truly criminal behaviour to be punished by criminal law; and allows civil orders such as injunctions and disqualification orders to stop offending behaviour quickly, without preventing later criminal proceedings.
6.112Our initial view is that there may be cases where imprisonment and criminal conviction might validly be sought for conduct which has already resulted in a civil pecuniary penalty. Where there is a risk of abuse or oppressiveness, the court can exercise its existing power to strike out the second proceedings. In these circumstances there may be no need for a statutory bar on proceedings. However, as we discuss above, there may be a need to limit the use to which evidence given in the civil proceedings may be put in the later criminal proceedings.
6.113The nature of a criminal fine, however, is arguably not so different from a pecuniary penalty. In our view, allowing the imposition of one monetary penalty after another is harder to justify. We are therefore attracted to a formulation whereby a person cannot be ordered to pay a criminal fine after a pecuniary penalty has been imposed for the same conduct.
Q12 Are there any circumstances in which a regulator should be able to commence criminal proceedings if a civil pecuniary penalty has already been imposed?
(d) Commencing or restarting civil pecuniary penalty proceedings after a criminal sanction has been imposed
6.114This scenario can arise both where civil pecuniary penalty proceedings are commenced after the imposition of a criminal sanction, but also where civil pecuniary penalty proceedings have been stayed pending the outcome of the criminal action. This appears to be possible under the HSNO Act which provides for a stay of civil pecuniary penalty proceedings, but is silent on what should happen after the criminal proceedings have been completed.
6.115We cannot think of any circumstances where it should be permissible for a regulator to bring civil pecuniary penalty proceedings after a criminal sanction has already been imposed. To do so might be justifiable if the civil pecuniary penalty serves some auxiliary, non-punitive purpose such as to compensate or rectify damage. However, even in those few narrow cases where civil pecuniary penalty regimes might allow this, compensation could be obtained through other means.
6.116A bar on taking civil pecuniary penalties after criminal conviction was the preferred approach put forth in the Ministry of Justice draft guidelines. Australian guidelines also supported this position. Where civil proceedings have been stayed, the Australian guidelines referred to the Environment Protection and Biodiversity Conservation Act 1999 (Cth) as a model, which states that the stayed proceedings “may be resumed if the person is not convicted of the offence. Otherwise, the proceedings for the order are dismissed.”
Q13 Should all statutes containing criminal offences and civil pecuniary penalties state that no person may be liable for a civil pecuniary penalty and a criminal sanction for the same conduct?
Q14 Are there any circumstances in which a regulator should be able to commence civil pecuniary penalties proceedings if a criminal sanction (whether a fine or imprisonment) has already been imposed?
Imposition of multiple civil pecuniary penalties
6.117Double jeopardy concerns also arise where one act or course of conduct could lead to the imposition of a number of civil pecuniary penalties. A number of statutes envisage this and state that only one penalty may be imposed in these cases, although proceedings may be brought in respect of any one or more of the contraventions. For example, Part 2 of the Commerce Act 1986 deals with restrictive trade practices. There is a general prohibition in s 27 on entering into contracts and arrangements that substantially lessen competition. An arrangement between two persons to enter into price fixing would breach both s 27 and the express provision against price fixing (s 30). The Act makes it clear that the regulator can bring proceedings in respect of either or both contravention, but only one penalty can be imposed:
Where conduct by any person constitutes a contravention of 2 or more provisions of Part 2, proceedings may be instituted under this Act against that person in relation to the contravention of any 1 or more of the provisions; but no person shall be liable to more than 1 pecuniary penalty under this section in respect of the same conduct.
6.118The Law Commission supports this approach and suggests such a provision should be included in any statute where it is possible for the same conduct to breach a number of different penalty provisions. The Ministry of Justice draft guidelines, 2007 Australian guidelines and Australian Law Reform Commission report all favour the inclusion of such a provision in civil pecuniary penalty statutes. This should also be taken into account if the same conduct can lead to penalties being imposed under different statutes. We note, however, problems around determining what is “the same conduct”, and discuss this below.
6.119Some statutes also prohibit imposing more than one management ban for the same conduct. However a number of regimes clearly authorise making more than one civil order (for example a pecuniary penalty order, compensatory order and banning order) for the same conduct. Section 48 of the Unsolicited Electronic Messages Act 2008 provides that a person may be liable for a pecuniary penalty, compensation and damages for the same civil liability event, but the Court must have regard to whether the person has already had another civil liability remedy imposed for the same event. We think it is appropriate not to allow a person to be subject to more than one management ban for the same conduct. However, there may be cases where it is appropriate to specify in a statute that a management ban and a civil pecuniary penalty can be imposed for the same conduct on the grounds that management bans also serve a protective function. However, management bans can have serious financial consequences on the individual, and there may be a case for requiring the Court to take this into account when determining the quantum of a pecuniary penalty for the same conduct.
Q15 If the same conduct can contravene multiple civil pecuniary penalty provisions, should the statute provide that proceedings may be brought in respect of any one or more of the contraventions, but that a person cannot be liable for more than one civil pecuniary penalty for the same conduct?
Q16 When imposing penalties, should courts be required to take into account whether a management ban or other civil remedy has been imposed for the same conduct?
What is “the same conduct”?
6.120The orthodox approach to double jeopardy issues in criminal proceedings is to focus on the similarity of the offences, rather than whether the two offences sought to be charged arise out of the same facts. A substantial body of criminal case law has discussed whether multiple offences sought to be charged by the prosecution are sufficiently similar, in whole or in part, for a plea of previous acquittal or conviction under s 358 of the Crimes Act 1961 to succeed.
6.121By contrast, civil pecuniary penalty statutes focus on the similarity of the conduct or acts targeted. Therefore if the imposition of multiple penalties or sanctions are said to be barred by statute, the focus will be on the factual acts, matters or transactions in the particular case.
6.122The position is complex where the regulator seeks a number of separate penalties for a series of related acts or transactions that all took place in a short timeframe. There are likely to be questions around whether these should be characterised as one course of related conduct; or whether each act is a separate contravention. If a penalty was imposed in respect of each separate contravention, would this amount to imposing multiple penalties for “the same conduct”? This is the formulation currently used by a number of statutes, but other statutes refer to “substantially the same conduct”; “the same or substantially the same act or omission”; the same “conduct, events, transactions or other matters” or the same “contravention”. All of these could raise difficult questions of statutory construction.
6.123This was the issue in Commerce Commission v Accent Footwear in respect of multiple civil pecuniary penalties sought for five separate acts relating to resale price maintenance, which occurred within a number of months. The Commission argued that each was a contravening act. The defendant argued that the acts in aggregate amounted to the “practice of resale price maintenance” prohibited by s 37(2), and therefore amounted to the same conduct for which a single penalty should be imposed. Williamson J viewed each as a separate act but took a totality approach drawn from the criminal law, viewing all the contraventions in the round and imposing penalties to reflect the overall position.
6.124Given that issues are likely to arise around the similarity or otherwise of the conduct, acts, transactions, etc in issue, we suggest, again, that there is a need for civil pecuniary penalty provisions to be drafted clearly. Thought should be given to whether a series of related acts constitutes “the same conduct” and if so, how this may be expressed in legislation.
6.125An example of a provision that addresses these matters in greater detail (although in respect of criminal offences, not civil pecuniary penalties) is s 214 of the Australian Consumer Law, under the Competition and Consumer Act 2010 (Cth). That provision mitigates the risk of double punishment at penalty setting stage, by limiting the penalty a court may impose where a person is convicted of more than one offence which “appear to the court (i) to have been of the same nature or a substantially similar nature; and (ii) to have occurred on at or about the same time”.
6.126As noted at paragraph 6.52 above, a further issue that may arise is who carries the onus of establishing the similarity of the conduct, acts, contraventions or similar.
Q17 Should statutes specify in more detail what constitutes “the same conduct” for the purposes of multiple civil pecuniary penalties and criminal sanctions?
Q18 Where there is sufficient similarity of conduct, should this be dealt with through a statutory bar or through guidance for the courts in penalty setting?
The need for enforcement policies
6.127One further matter arises which relates to the issues faced by enforcement bodies when they have parallel criminal offence and civil pecuniary penalties at their disposal. When faced by a suspected breach in those circumstances, enforcement bodies need to determine whether to opt for the commencement of a prosecution or an alternative route, such as civil pecuniary penalty proceedings. In doing so, they will be guided by the Solicitor-General’s Prosecution Guidelines. There may be concern that the terms of the Guidelines might tend to encourage the use of measures such as civil pecuniary penalties instead of criminal offences. This may be the case particularly in the light of guideline 6.9.13 which states that the availability of any proper alternatives to prosecution should weigh against a decision to prosecute.
6.128Our consultation with enforcement agencies suggests that some operate under, or are in the process of developing, their own enforcement guidelines to ensure consistency and transparency around the factors that will be taken into account when an enforcement decision is made. Such enforcement guidelines or policies will need to be drafted in the light of the Solicitor-General’s Guidelines.
6.129We suggest that the development of such guidelines and policies should be a key response by enforcement agencies armed with a range of sanctions and remedies, such as civil pecuniary penalties. We note that some United Kingdom statutes require this of their regulatory agencies (or, in the absence of a particular agency, the appropriate Secretary of State), particularly where the agency has the power to impose substantial civil penalties itself. Transparency will be best achieved by the publication of such policies on enforcement bodies’ websites.
Q19 Do you agree that enforcement bodies should develop and publish enforcement guidelines or policies?